Best practices and challenges
“In the country of the blind, the one-eyed man is king.” —Michael Apostolius, Proverbs, fifteenth century
The audit management processes and principles of ISO 9001:2015 and 19011 have become an important concept in learning how to manage HSEQ audit programs more effectively. An especially useful quality management tool has been competitive benchmarking. Companies use benchmarking studies to identify best practices to incorporate into their programs. In conducting benchmarking studies, evaluators often also identify the biggest common challenges facing audit program managers.
This chapter discusses some of the best practices and challenges associated with HSEQ audit programs. The conclusions are based on several benchmarking studies and third-party evaluations of corporate audit programs. As the sources are necessarily limited to our experiences, no doubt many other best practices, in particular, are not discussed in this chapter. These will surface over time.
Overview of benchmarking
The concept of benchmarking HSEQ audit programs has received considerable attention in the past few years. Generally speaking, benchmarking is the process of measuring products, services and practices against competitors or those who have been recognized as leaders in their fields of practice. This chapter does not intend to provide a discourse on each of the steps involved in the benchmarking process; that task is better handled by other sources. However, based on previous HSEQ audit program benchmarking experiences of the authors, five steps have been deemed to be key to conducting a successful study. Those five steps are discussed below.
1. Define the scope
One can benchmark any and/or all components of an HSEQ audit program. For example, a company, amid a reorganization may wish to determine the best reporting relationship for its audit program. Thus, its goal in a benchmarking study might be to determine just that: among a dozen or so targeted companies, to whom did the corporate audit program manager typically report?
Broader-based studies can help as well. However, there are many components to an audit program, and it is probably best to define and analyze only the most crucial (e.g., frequency and scheduling of audits, auditor competency and training (in house vs. external) follow-up systems, software leveraged, etc.).
2. Select target companies using a variety of techniques
One can select among companies in similar businesses, in industry in general, or with known “best-in-class” audit programs. Any of these approaches will suffice, depending on the objectives of the study. One can also select companies using financial or business criteria such as company size, return on equity, the percentage of sales in service businesses, and/or the percentage of business in selected locations or countries. The idea is to find groupings of similar companies based on key financial criteria against which to benchmark.
3. Create participation incentives
Benchmarking has become a common business analysis technique, so quite often it is not difficult to identify willing participants who are prepared to take the time on their end to be interviewed, etc. And some organizations will never be prepared to share their internal practices or processes with anyone, or for any reason. However, some incentive will usually be required. This can be a report summarizing the results of the study, although for a participant to receive the full analysis, some financial participation in the study might also be usually expected.
4. Develop measurable criteria
This can be a difficult challenge, especially if one is evaluating the “softer” components of a program. However, developing measurable criteria in advance is crucial to comparing results from disparate companies. These criteria might include the following:
- Frequency of audits for major facilities
- Type of report, if any, left with site staff at the close of the field audit
- Draft and final audit report types (e.g., exception reporting only) and schedules
- Types of technologies leveraged on the audit program
- Frequency and type of follow-up system
- Use of legal protections
- Frequency and type of reporting to management
- Organizational levels between the audit program manager and the chief executive officer
- Budget for audit program per unit of company sales or % of annual operations budget
Each of the above criteria is generally quite measurable and requires short cryptic responses. The evaluator can then make broad conclusions based on the results (e.g., 50 percent of the benchmarked companies use in-house developed software to manage their audit program vs. 3rd party applications to develop their audit reports).
5. Utilize focus group sessions
Bringing together the participants of a benchmarking study for a day can be an extremely useful exercise. It can help to ensure that individuals are not discussing apples and oranges when addressing complex program issues. The technique can also help to identify subtle nuances in programs that otherwise might not surface during a one-on-one interview. If participants have difficulty assembling in one location, a Webex or Zoom or Teams meeting can be a suitable substitute, and in some cases are the defacto audit process for remote auditing for several reasons which we'll profile later.
Best practices
In benchmarking audit programs over the past few years, several suggested best practices have surfaced. Not all of these might be applied effectively to a given audit program but using them selectively can result in an improved audit program that meets the ever-increasing expectations of stakeholders. This section describes a number of those practices.
Reports to management
Reporting health and safety statistics to executive management has been a common practice in many industries for many years. More recently, overall HSEQ performance is being reported not only to executives but to the public as well, with corporate and social responsibility reporting gaining traction internationally. Annual environmental or sustainability reports are commonplace among progressive companies. Within these reports, HSEQ audit programs are occasionally, but increasingly, being addressed.
For HSEQ audit programs to be successful, some form of reporting to the company’s executives is recommended and strongly encouraged. In some companies, the CEO has shown interest that they review every report, and calls are made to line managers when it is perceived that individual issues are not being resolved quickly enough. This demonstrates the top-management commitment that any credible audit management program requires for success. More commonly, senior management might receive a quarterly or semi-annual briefing on issues identified by the audits. These issues might be noncompliance problems that cut across the corporation and require a systemic remedy, statistics among business units on timely resolution of findings, or instances where the audit program saved the company money through, for example, the avoidance of fines or substitution of less hazardous materials.
Relationship with compensation
To ensure support for an HSEQ audit program, some companies will factor audit results into the bonus equation or annual performance evaluation used for facilities and their management team. This usually gets the attention of the individuals principally responsible for remedying problems; however, some caveats are in order.
First, managers should be held more accountable for fixing identified problems than for the results of the first audit at a given facility. This first audit usually sets the baseline and should not be perceived to be a witch hunt or a problem identification/finger pointing exercise. How well the site staff responds after the audit is really what should be evaluated. That means the efficiency and relevance of the corrective action of the finding is more valuable than simply stating the facts of the finding. It’s a “walking the talk” scenario.
Second, one must be careful of falling into the trap of numerically scoring the results of an audit in order to determine compensation. For one thing, it is difficult to compare facilities and their audit performance. Many factors are beyond the plant manager’s control, such as the regulatory stringency of geographical location in which the plant is located; the type, age, and size of the facility; the toxicity of the materials used; and the nature of the property (e.g., the presence of wetlands).
Also, using a scoring system tied to compensation can heighten the tension of an audit because the plant staff will typically be more argumentative about the number and significance of findings. Where scoring is used, too much time can typically be spent on whether the resultant score is an 81 or a 79 or whether the score is higher than the last audit. This has the potential to take away from the real purpose of the audit—to find and fix the problems. At the end of the day the audit should not be strictly about numbers, as these numbers can be subjective and arbitrary. It should be about the objective evidence regardless of any number assigned to the final audit conclusion, and the action taken to correct the issues reflective in the findings.
Do not pencil whip or tick the box approach
As always, the bottom line is the integrity of the audit process, the competency and diligence of the auditor or audit team, and the conscious and diligent attention to details, facts and evidence to avoid any perception of pencil whipping or just “check in the box’ auditing practice.
